Tax Deferred Exchange Representation

Tax Deferred Exchange Planning

Tax deferred exchanges can grow real estate equity. We emphasize strategic planning, guiding property exchange benefits analysis and review. Due to the timeline and tight structure intrinsic in perfecting an exchange, thorough evaluation of all process aspects and elements are required. We deliver advanced planning, strategy and experience to market and sell relinquished property and identify replacement property.

What is an IRC 1031 Tax Deferred Exchange?
An Internal Revenue Code Section 1031 Tax Deferred Exchange means a taxpayer trades investment property (Relinquished Property) for substitute investment property of equal or greater value (Replacement Property). A 1031 Exchange provides one of the best shelters for deferring capital gains tax. A taxpayer may reinvest proceeds from their Relinquished Property into a like-kind Replacement Property without recognizing gain through a 1031 Tax Deferred Exchange.

The Exchange Process
Most exchanges, simultaneous or delayed, involve three parties: the investor (exchanger) doing the trade, the buyer purchasing the exchanger’s (relinquished) property and the seller selling the exchanger a new (replacement) property. A Qualified Intermediary is necessary to create the properties exchange and obtain “Safe Harbor” tax code protection benefits preventing actual or constructive receipt of the exchange proceeds, disqualifying the transaction. This individual becomes the fourth party principal in simultaneous and delayed exchanges, similar to an escrow agency.

Tax Benefits of Exchanging
Property owners can accomplish virtually any investment objective using tax deferred exchanges, and whether property is owned through cash or leverage, benefits are significant. These include greater leverage into a replacement property, investment diversification, joint-ownership avoidance, cash flow improvement, geographic relocation and multiple business or investment properties’ consolidation.

Non-Tax Benefits of Exchanging
Exchanging provides a wide array of non-tax opportunities to suit the investor’s goals. These include reposition asset acquisition, property category change, increased leverage, depreciation deductions restructuring, management estate consolidation and retirement planning, relocation capability, increased cash flow, diversification and/or property consolidation, joint-ownership avoidance and phantom gain deferral on problem properties.

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